Bankrupt Internet services company KPNQwest NV laid off about 500 people at its head office in Hoofddorp, Netherlands, on Wednesday, the company confirmed.

Despite the layoffs of "more than a third" of the headquarters staff, the company is keeping its network up and running, spokesman Piers Schreiber said Thursday.

"A lot of people are working for free," said Schreiber. He would not comment on who is financing the maintenance of the network, but it has been rumored that Koninklijke KPN NV, which owns 40 percent of KPNQwest, is helping out. Many of KPN's customers use KPNQwest's network.

More layoffs are expected, for example at the company's Belgian business, which filed for protection from its creditors last week, but may go bankrupt later this week.

"There are some labor issues in Belgium," Schreiber said, declining to comment further.

KPNQwest's 18-country, 25,000-kilometer network is said to be Europe's largest fiber-optic network, carrying about 25 percent of the continent's Internet traffic. Competing bandwidth providers, including WorldCom Inc. and Vanco PLC, are actively targeting KPNQwest customers and KPNQwest is helping clients switch.

KPNQwest, once a stock market darling worth US$40 billion, filed for bankruptcy last Friday. The company could no longer afford to keep its everyday business afloat after banks and its main shareholders KPN and Qwest Communications International Inc. of the U.S. withdrew support. The company's assets are being sold piecemeal to the highest bidders.